On March 23, 2018, Congress passed the Consolidated Appropriations Act, 2018 (the Act), which established a new broadband loan and grant pilot program, now called the Rural eConnectivity Pilot Program (ReConnect Program). The Act appropriated a budget authority of $600,000,000 to be used on an expedited basis. For that reason, the United States Department of Agriculture (USDA) determined that it is in the public interest to move forward with developing procedures for the ReConnect Program within a Funding Opportunity Announcement (FOA) instead of rulemaking to meet the statutory mandate to implement this new program. An electronic copy of the ReConnect Program FOA is available under Forms & Resources.
One of the essential goals of the ReConnect Program is to expand broadband service to rural areas without sufficient broadband access, defined as 10 megabits per second (Mbps) downstream and 1 Mbps upstream. The first round of applicants have three separate funding categories to choose from: 100 percent (%) loan, 50% loan / 50% grant, or 100% grant. Given the varying closing dates for each funding type, applicants will be limited to one application for this FOA.
To be eligible for a 100% loan or 50% loan / 50% grant, the proposed funded service area in an application must be in a rural area where 90% of the households do not have sufficient broadband access. To be eligible for a 100% grant, the proposed funded service area in an application must be in a rural area where 100% of the households do not have sufficient broadband access. No matter which funding type the applicant requests, the proposed network must be capable of providing service to every premise in the proposed funded service area at a speed of at minimum, 25 Mbps downstream and 3 Mbps upstream.
Financial Feasibility and Sustainability Requirements
Only projects that USDA determines to be financially feasible and sustainable will be eligible for an award under this Funding Opportunity Announcement. An eligible project must demonstrate a positive ending cash balance as reflected on the cash flow statement for each year of the forecast period and demonstrate positive cash flow from operations in year five of the forecast period. Eligible projects must also meet at least two of the following requirements in year five of the forecast period: a minimum Times Interest Earned Ratio (TIER) requirement of 1.20, a minimum Debt Service Coverage Ratio (DSCR) requirement of 1.20 and a minimum Current Ratio of 1.20.
If an applicant has no existing debt, is not applying for any loans from this program or proposing to borrow funds from any other fund sources during the forecast period and is applying only for grant funds, only the Current Ratio will be applied and not the TIER or DSCR. For this situation, applicants must meet the minimum Current Ratio requirement of 1.20. Please contact the USDA General Field Representative in your state if you have further questions.
Eligible Funding Purposes
Award Funds may be used to pay for the following costs:
- To fund the construction or improvement of buildings, land, and other facilities that are required to provide broadband service.
If other services will be provided over these facilities, then award funds may also be used to acquire the additional equipment. For example, award funds may be used to purchase equipment that is required to comply with the Communications Assistance for Law Enforcement Act, 47 U.S.C. § 1001 et seq (CALEA).
- To fund reasonable pre-application expenses.
Funding for pre-application expenses may not exceed five percent of the award amount. If the funding category applied for has a grant component, then grant funds will be used for this purpose; otherwise, loan funds may be applied. All pre-application expenses must be included in the first request for award funds. These expenses may be reimbursed only if they are incurred after the publication date of this Funding Opportunity Announcement (FOA) and are properly documented.
- To fund the acquisition and improvement of an existing system that is currently providing insufficient broadband service (eligible for 100 percent loan requests only).
Funding for the acquisition of an existing system may not exceed 40 percent of the award amount. After improvements are made, the upgraded system must meet the requirements of this FOA.
- To fund terrestrial based facilities that support the provision of satellite broadband service.
Award amounts under this Funding Opportunity Announcement (FOA) will be limited as follows:
- 100 Percent Grant.
Up to $200,000,000 is available for grants. The maximum amount that can be requested in an application is $25,000,000. Applications are due to USDA by May 31, 2019.
- 50 Percent Loan / 50 Percent Grant.
Up to $200,000,000 is available for loan/grant combinations. The maximum amount that can be requested in an application is $25,000,000 for the loan and $25,000,000 for the grant. Loan and grant amounts will always be equal. Applications are due to USDA by June 21, 2019.
- 100 Percent Loan.
Up to $200,000,000 is available for loans. The maximum amount that can be requested in an application is $50,000,000. Applications are due to USDA by July 12, 2019, though USDA will evaluate and award loan-only projects on a first-come-first-serve basis, beginning in April 2019.
See the ReConnect Program Available Funding Categories page for more information about each funding type.